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Jister1

Mpc Expects 'sharp Rise' In Inflation

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MPC Expect Inflation

Very interesting....Better than expected.

MPC members say the 'sharp rise' would be temporary and 'would have little implication for policy' unless it proved more permanent.

sounds like......we will not make any IR adjustments untill this inflation is rife and debt is blootered.

:rolleyes:

Edited by Jister1

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MPC members say the 'sharp rise' would be temporary and 'would have little implication for policy' unless it proved more permanent.

It'll be good, unless it's bad.

How much do these experts get paid again?

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MPC members say the 'sharp rise' would be temporary and 'would have little implication for policy' unless it proved more permanent.

It'll be good, unless it's bad.

How much do these experts get paid again?

Too much, apart from Captain Obvious - he's worth every penny.

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Guest The Relaxation Suite
MPC Expect Inflation

Very interesting....Better than expected.

MPC members say the 'sharp rise' would be temporary and 'would have little implication for policy' unless it proved more permanent.

sounds like......we will not make any IR adjustments untill this inflation is rife and debt is blootered.

:rolleyes:

IRs at 4% or 5% in 12 months?

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You'd get a better insight asking the heads of the lending banks since they are the ones that can bring the good times back. The public still have appetite for credit, they can't wait. When the high street opens the values we will see reassuring house price gains once more.

Better to look at teaser rates and deposit stipulations than the views of the discredited Bof England.

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IRs at 4% or 5% in 12 months?

Looks like panic stations at the ready doesn't it. Bejeseus, can't we just be sensible and put interest rates at 2% now please?

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IRs at 4% or 5% in 12 months?

Prior to seeing this I thought no....but it looks like they are acknowledging the obvious and if the expected inflation is not temporary then ofcourse they will raise IR's. What I would add is that I think they will deliberatley conceal the extent of inflation for as long as possible.

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IRs at 4% or 5% in 12 months?

Banks at the moment have massive margins, many mortgages are base plus 4 or 5%.

If they tried to protect those margins with base rates at 4% or 5% - which they would.

Mortgage rates won't be far off 10%.

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Looks like panic stations at the ready doesn't it. Bejeseus, can't we just be sensible and put interest rates at 2% now please?

No, because the fan-charts will show inflation 2 years out at exactly 2%!

This worrying graph from this post by Free Trader on the Gilts Thread:

rpi0809.gif

Early next year could look interesting as far negative IRs go. Has Gordon forgotten who it is most likely to vote?

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No, because the fan-charts will show inflation 2 years out at exactly 2%!

I get the impression that the models used by the Treasury would have inflation at 2% in 2 years even if we were having to add a zero a day to all bank notes right now.

Would it be reasonable to guess that the only major reason for that big drop is the big drop in IRs?

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you realise they're mostly talking about the effect of the vat cut dropping out? that and oil. nowt to do with 'qe' or whatever.

Doesnt really matter though, does it?

If you have you're cash on deposit at current IRs and there is, say, 50% inflation for one month then it goes back to zero, you're cash is still only worth 2/3rds of what it was before, even though inflation is now zero.

If Merv, Gordon and Darling think all of us (voting) people who were net non-participants in his ponzi schemes and his current schemes to make the prudent pay for the feckless dont realise this, they have another think coming.

Edited by General Melchett

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Over on 2 other threads I have been called an idiot for even daring to suggest that interest rates might rise in the next 5 years.

All the propaganda about deflation and low interest rates has had one purpose - to cover QE.

And QE has been done for one reason only - to bail out the Government and try and create a mini-boom before the next election.

The bank of England ARE NOT INDEPENDENT because all its members are political appointees who know if they tow the line, when they leave they will be well looked after by the political establishment.

All the BOE's interest rate decisions over the last 10 years have been politically, not economically motivated and the same is true now.

The base rate is being set for short term political reasons - not long term economic ones.

Low interest rates have resulted in a weak pound which because we import so much fuel, food and manufactured goods IS INFLATIONARY.

They have also resulted in money pouring into the stock market - in effect creating asset price inflation in shares which is the next bubble that is going to burst with disasterous consequences.

And because the Government has sucked up all the QE money the economy is stagnating.

Merving King is a F*cking Clown and all economists should be lined up against a wall and shot.

The way out of this all is obvious, but no one in politics is going to say it because turkeys don't vote for Christmas.

:angry: :angry: :angry: :angry:

Now I'm off, because I'm fed up of wasting my breath.

Cheerio.

:blink:

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breaking on Gloomberg:

King say UK banks are not in good shape. No shit sherlock:lol: :lol:

wasn't it last week or the week before that the economy was recovering & recession was over?

fooken hilarious....

what is the excuse for this chopping & changing, is it that they don't actually have a clue, guv, and perhaps more honesty would mean their only comment would be "can i just have me salary and go home to watch Hollyoaks and the Alpen ad with them nice girls and the winkin' bloke, ta"

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what is the excuse for this chopping & changing, is it that they don't actually have a clue, guv, and perhaps more honesty would mean their only comment would be "can i just have me salary and go home to watch Hollyoaks and the Alpen ad with them nice girls and the winkin' bloke, ta"

bankers are lying about the value of their assets...he knows it...course, he cant tell how much they are lying...cos well, they are lying.

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If I have said it once I say it again.

'Deflation my ****'.

Inflation is what they need so inflation is what we are going to have. Interesting isn't it that the MPC is supposed to hit the governments 'official' inflation target, that being the case then why are they not jacking up interest rates now? The answer of course is that the MPC is really going to target the 'unofficial' inflation target, the one flashed on the back of a brown envelope that reads '12% per annum needed chaps'............well for around 3 years or so.

There is common wisdom on this forum that inflation figures are manipulated, common wisdom that assets need to remain inflated.................there seems complete disconnect in many minds though when trying to join all the common wisdom dots up.

Sterling has crashed by 30% against our main export market, plenty of scope now for employers to remain 'competitive' whilst caving in to rising wage demands, its all nicely set up.

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Banks at the moment have massive margins, many mortgages are base plus 4 or 5%.

If they tried to protect those margins with base rates at 4% or 5% - which they would.

Mortgage rates won't be far off 10%.

Do you know anyone who has tried to get a mortgage recently?

My Husband shares an office with a mortgage guy, the reality is more like 7.5%!

Unless you have a hefty deposit, I mean 30% plus....

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The truth is, and most people don't realize this, is that property is not wealth, it is debt.

It only creates the illusion of wealth if you can get someone else to pay more for it than you did.

The banks are the parties who gain wealth from property. The is ESPECIALLY TRUE IN THE UK!

In the US the national 'wealth' (which has dropped from $52 trillion to $40 trillion since 2006) is largely based upon housing. However, this is another outright economic lie. That is, in order to realize this 'wealth' home owners would have to sell their properties. But they still need somewhere to live. So if they all downsize, there would not be enough houses to exchange, and if there were enough houses, there would not be enough buyers for their larger properties. Therefore this is not national wealth, it is simply an illusion.

I have read that there are some home builders in America (D R Horton/Texas) who are going gangbusters at the moment, building small, cheap houses. I have to wonder if some of the demand for these is coming from home owners who are deeply in negative equity in larger homes, downsizing to reduce their outgoings and debt and then walking away from the ne property, letting the bank absorb the loss. After all, most of these people only paid 5% or less down.

Although the housing 'industry' would say that this is an 'immoral' thing to do; people in the US are realizing now that it is nothing to do with morality, it is purely a financial decision. This, along with some recent court decisions, is going to create havoc in the banking system there. I suspect, in the end, that many people will simply stop paying their mortgages and claim the property in full, because the banks have not retained the original contract documents. There are suspicions that the banks are deliberately destroying these documents because there is fraud in them, and the courts are not allowing cases to be heard unless the banks produce the documents.

Ha Ha.

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Sterling has crashed by 30% against our main export market, plenty of scope now for employers to remain 'competitive' whilst caving in to rising wage demands, its all nicely set up.

Why would they not just take the extra profit instead? With 3 milion plus unemployed on the way, and a 'globalised' workforce I don't see where the pressure to put up wages is coming from. McDonalds profits have increased dramaticly since the recession as people switch to cheaper food options, but they still pay the same crap wages

Edited by wonderpup

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Why would they not just take the extra profit instead? With 3 milion plus unemployed on the way, and a 'globalised' workforce I don't see where the pressure to put up wages is coming from. McDonalds profits have increased dramaticly since the recession as people switch to cheaper food options, but they still pay the same crap wages

You are mixing up two issues. Wages are a function of supply and demand we could have 6 million unemployed but if their skills are of no value then thats precisley what they get........no value. McDonalds employees are two a penny, go figure. Inflation is the function of rising prices, just because you don't work does not mean prices will not rise you simply get poorer, whilst those in work and whose skills are needed negotiate on the basis of the rising prices.

The only differance with where we are now and 70's Britain is the power of the unions, if the unions were more powerful then your 'extra profit' will be taken up in wage negs no doubt, the little doubt I have is that labour is not organised as it used to be. But from my perspective, the company I work for has had the best year ever even in the teeth of this 'recession', my bonus is at full whack and I am 3 months from my payrise..............This year will be the year to put the marker down.

Your companies exports are now 30% cheaper, you not want a peice of that? They could increase their cost base by the same 30% and be in the same competive position they were at the outset of all this.

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you realise they're mostly talking about the effect of the vat cut dropping out? that and oil. nowt to do with 'qe' or whatever.

Strange how the deflationary effect of the VAT cut from 17.5% to 15% was never really discussed by the media and BoE, isn't it?

Nor for that matter has it been put to the public that another large part of the 'deflation' we are seeing is down to the effect of the slashing of interest rates on the yoy RPI figure and the resulting effect on mortgage repayments.

I expect however that the reintroduction of 17.5% VAT will be used as an excuse for inflation over most of 2010 and we'll be told that accordingly it's right to keep printing hundreds of billions of pounds of cash (real reason being to monetise government debt).

As shown in the straight RPI and CPI charts on the 'Gilts' thread, we had about 5 months of actual falling indices and they've been increasing again since the start of the year.

cpi0809.gif

rpi0809.gif

rpix0809.gif

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